Accounting mcqs

✅ The correct answer is B.
A company cannot issue redeemable preference shares for a period exceeding 20 years. A company may issue preference shares which are liable to be redeemed within a period not exceeding twenty years from the date of their issue under section 55 of the Companies Act 2013.

✅ The correct answer is C.
Legal expenses incurred on a suit for breach of contract to supply goods is a Revenue expenditure. A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place.

✅ The correct answer is C.
Bank account will be credited in the books of XYZ Co. Ltd, if the business purchases a vehicle thriugh cheque.

✅ The correct answer is D.
Dividends are usually paid as a percentage of Paid up capital.

✅ The correct answer is A.
Salaries paid in advance should be shown on Asset side of the Balance sheet. An advance paid is recorded as a current asset in the company’s balance sheet.

✅ The correct answer is B.
Normally the Personal account and Real account are balanced. Only accounts relating to assets and liabilities ,that is real account and personal accounts are balanced periodically.

✅ The correct answer is B.
The purchase price of a software that will be used for more than 12 months should be regarded as a capital expenditure. It is considered a capital expenditure when the asset is newly purchased or when money is used towards extending the useful life of an existing asset.

✅ The correct answer is C.
Salaries of selling staff would NOT be considered as a component of ‘cost’ of stock. When investors purchase shares of stock, the price paid includes two components: the price of the stock and the fee charged by the brokerage firm, called commission.

✅ The correct answer is B.
Discount Received is a column found on the credit side of the Cash Book.
When a creditor is paid and the business receives a discount the discount received and is recorded in the discount received column and the corresponding entry appears as a debit in the creditor’s account.

✅ The correct answer is D.
Purchase of fixed asset is NOT a cash inflow. Cash inflow is the money received by an organization as a result of its operating activities, investment activities, and financing activities.